The pricing strategy of dual-channel supply chain with risk-averse agents and heterogeneous preference consumers
ISSN: 0368-492X
Article publication date: 15 June 2021
Issue publication date: 3 March 2022
Abstract
Purpose
The purpose of this paper is to investigate the pricing strategy and the impact of agents' risk preference in a dual-channel supply chain in which both agents are risk-averse.
Design/methodology/approach
The authors make use of the mean-variance (MV) method to measure the risk aversion of the agents and apply Stackelberg game to obtain the optimal strategies of the proposed models. Furthermore, the authors compare the optimal strategies with that in the benchmark model in which no agent is risk-averse.
Findings
The authors find that the pricing decisions can be divided into four categories according to the risk attitudes of the agents: the decisions that are independent of two agents' risk attitudes, the decisions that depend on only one agent’s risk attitude (i.e. depend on only manufacturer's risk attitude and depend on only retailer's risk attitude) and the decisions that depend on both agents' risk attitudes. In addition, the authors find that the retail price will be lower and the wholesale price in most cases will be lower than that in the benchmark when at least one agent's risk control is effective; the demand will be always increasing as long as one agent's risk control is effective. Furthermore, compared to the benchmark, a win-win strategy (i.e. Pareto improvement) for the supply chain members can be obtained in a certain range where the agents' risk controls are appropriate.
Originality/value
This research provides a theoretical reference for the managers to make the pricing decisions and the risk control in dual-channel supply chains with heterogeneous preference consumers.
Keywords
Acknowledgements
The authors would like to thank the referees and the Editor for a number of suggestions that greatly improved the paper. The authors would also like to thank Professor Song Dongping at the University of Liverpool Management School for polishing the English of the present paper.
Funding: This paper is supported by the National Natural Science Foundation of China (Grant No. 71801085) and Doctoral Scientific Research Foundation of Henan University of Science and Technology (Grant No. 13480037).
Citation
Wang, R., Chang, Z. and Yan, S. (2022), "The pricing strategy of dual-channel supply chain with risk-averse agents and heterogeneous preference consumers", Kybernetes, Vol. 51 No. 4, pp. 1413-1428. https://doi.org/10.1108/K-07-2020-0476
Publisher
:Emerald Publishing Limited
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